Societe Generale identifies downside potential for the Australian dollar as weak NAB business confidence and disappointing home loans data collide with rising global bond yields.
Weak Australian data (NAB business confidence taking a sharp turn lower, disappointing home loans) plus rising global bond yields pressuring Australia's leveraged housing market give AUD/USD room to fall, according to Societe Generale's Juckes. As a bank strategist view rather than a market event, the move is directional but not guaranteed, and he still prefers AUD rates over shorting the pair.
Societe Generale strategist Kit Juckes warns that the Australian dollar is vulnerable to further declines following weak domestic economic data. The NAB business confidence indicator turned lower, while home loans data released on November 11 disappointed, adding pressure to Australia's leveraged housing market amid rising global bond yields.
Australian business confidence fell sharply in the latest NAB survey and home loans data released this morning were also weak, while rising global bond yields are pressuring Australia's housing market.
No. The bank says the pair has room to fall after the Australian dollar's strong performance this year, but considers AUD rates a better trade than shorting AUD/USD.